US stocks and the dollar took a sharp downturn as President Donald Trump ramped up his verbal attacks on Federal Reserve Chairman Jerome Powell, calling him "a major loser" for his reluctance to lower interest rates.
In a social media post, Trump urged Powell to take immediate action, calling for "pre-emptive" interest rate cuts to stimulate the economy.
He accused Powell of being too slow in responding to economic conditions, adding, "There can be a SLOWING of the economy unless Mr. Too Late, a major loser, lowers interest rates, NOW."
Trump's remarks come amid rising concerns over his tariff policies, which have sparked a sell-off in the stock market and heightened fears of a potential recession.
The growing tension between Trump and Powell, whom he appointed to lead the Federal Reserve during his first term, has further exacerbated market instability.
On Monday, the S&P 500 index dropped by approximately 2.4%, bringing its losses for the year to around 12%.
The Dow Jones Industrial Average fell by 2.5%, down 10% year-to-date, while the Nasdaq slid by more than 2.5%, reflecting a 18% decline since January.
Despite being considered safe assets in times of financial volatility, the US dollar and government bonds were not immune to the market turmoil.
The dollar index, which measures the greenback's strength against other currencies like the Euro, plummeted to its lowest point since 2022. Meanwhile, interest rates on US Treasury bonds rose as investors demanded higher returns for holding government debt.
Across the Asia-Pacific region, stock markets showed mixed reactions. Japan's Nikkei 225 and Australia's ASX 200 each dipped by around 0.1%, while Hong Kong's Hang Seng Index saw a modest increase of 0.2%.
In contrast, gold prices surged to new heights as investors sought "safe-haven" assets, with spot gold surpassing $3,400 per ounce for the first time on Monday.
Trump's disdain for Powell is not new. During his first term, he openly discussed firing the Fed chair and has continued to press for lower borrowing costs. Powell, in turn, has warned that Trump's tariff policies are likely to raise prices and hinder economic growth.
Just last week, Trump publicly called for Powell's removal, tweeting, "Powell's termination cannot come fast enough." Such a move would be highly controversial and legally questionable, given the Fed's tradition of independence. Powell has previously stated that the president lacks the authority to dismiss him.
However, one of Trump’s top economic advisers confirmed on Friday that officials were exploring the possibility of removing Powell, though no decision has been made yet.
Source: BBC
BDST: 1209 HRS, APR 22, 2025
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